tv Communicators Roundtable on Net Neutrality CSPAN April 29, 2017 6:29pm-7:00pm EDT
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going forward, we cannot stick with regulations from the great depression that were meant to micromanage mob bell. instead, we need rules that focus on growth and infrastructure development. rules that give americans more online choice after speeds and more innovation. in short, digital opportunity. and we are going to deliver. shared with myi fellow commissioners of proposal to reverse the mistake of title ii and to return to the regulatory framework that served our nation so well during the clinton administration, the bush administration, and the first six years of the obama administration. chairslen: that was fcc ajit pai from earlier this week. our discussion on the "the communicators" is about his proposal. joining us is jeffrey eisenach.
and chris lewis, vice president of public knowledge, the consumer group. what is your take on what the chairman proposed earlier this week? christopher lewis: we think that the rule that we got in 2015 is working. they are wildly popular. the overwhelming majority of americans love to have clear rules of the road. we are concerned that he has gone down a path to review and potentially even repeal some or all of those roles. peter slen: why do you think those rules are necessary? internet hass the existed, it has been grounded on the principle of net neutrality. i think thatewis: is true. if you look at the history of the internet, from the 1990's,
the clinton era when we had dial-up internet, on through the 2000 when the commission really started to look at the concept of net neutrality, there has been broad support for the idea that we need to protect and open internet or the concept of net neutrality. the real debate in washington, away from the folks that seem to overwhelmingly support that, is how do we accomplish that? i believe that the rules were rooted in the strongest legal grounding in order to have those protections. it was validated by the court system last year. jeffrey eisenach: i think your question is the right one -- why did we need rules? it was something the chairman talked about in his speech. from the inception of the internet up to the date the rules were passed, the internet was open and there was no problem. as the chairman said, there was no dystopian controlled internet with isps or anyone else interfering with people's
abilities to look at the content of their choice. what you had was a hypothetical threat which was made into a motivated a lot of people. what you did not have is any credible evidence that there was an actual problem. the marketplace was working. when you have regulation, you have a balance. there are benefits and costs of regulation. ofare seeing reduced levels investment. and you see the costs of regulation in the form that once you get -- once you give the government agency the power to transfer wealth, and you have people engaged in lobbying over those issues. and this may be the most heavily lobbied issue ever. and that is not healthy either. it empowers washington, lawyers, and lobbyists.
peter slen: can we trust the isps to be our gatekeepers? jeffrey eisenach: i would come back to the fact of the matter. there simply is no evidence that isps have interfered with people's ability to use the applications or the content of their choice ever before. the question you would ask -- of a is one example telephone company in north carolina. it was settled in about six weeks in a painful process. it did not require declaring the internet to be a public utility. all of theserings costs associated with it. christopher lewis: you have more than one example of isps and broadband companies wanting their preferred content, to create fast lanes or slow lanes or to degrade traffic.
from the concept -- from the time when net neutrality was introduced, when the republican commission said principles around net neutrality, the powell doctrine, that was attempted to be enforced. there has always been an effort to enforce these rules. the question is -- what is the legal framework for them to do so? rulesurt held up the 2015 as strong legally. --re has been face time being held back by at&t to some customers. whether it is the public enforcement of comcast. the recent concerns that have been raised around comcast, a tnt and others preferring the
content that they own other than other content. let us walk through those, one at a time. let us talk first about the facetime episode. what we had was a tnt making a business decision that if people were using facetime on their 3g cell phones, this was 8-10 years ago, that it would cause congestion for other users on the at&t system. at&t was that competing with facetime. they were doing what might be whatd, but we do not know it would be called, under the current rules, but what most people would see as reasonable network management. what were the other examples you gave? comcast bid torrent. the theory with comcast -- it torrent is a pirates tight -- is
a pirates site that steals content. was comcast was doing throttling the torrent because it was eating up the bandwidth, being used on the shared modem system of a neighborhood. download orrying to visit websites, and you could not do so because your neighbor is uploading thousands of songs and movies onto the internet. wasnotion that comcast throttling bittorrent because comcast saw it as a competitive threat to its video business, is ludicrous. no one believes that. as you go through these examples, what you have is companies engaging in reasonable management in an effort to make a better system for all of their customers and with incentives to do so because it is a competitive environment. do not think any of those
examples hold up. when you look at the fcc's orders from 2015, they did not assert that isps have power. judge williams in his dissent called them out on that saying that they could not have it both ways. the declaration of something as a public utility has always come with some kind of demonstration of monopoly power. you have not tried to make that case, because i do not think it can credibly be made. jeffrey eisenach: the emphasis on monopolies is important. we have seen increasing consolidation in the broader media marketplace. we certainly see a lot of of ispsand combination and broadband companies buying content companies and each other . ist consumers definitely see a marketplace where they have
very few choices for access to the internet. andalk about monopolies what your average consumer sees is fairly accurate on the local level. these are acting as local monopolies. the chairman certainly has a legal case to make about what has changed in the two years that we have had internet rules and he will have to make that case in order to pass court muster and rollback these rules. he also has a political problem. consumers and average americans have already gotten upset over the fact that they have few choices when it comes to privacy. the rules have been rolled back by congress. and now, their choices may be taken away further. how does net neutrality rules promote choice?
they allow a market to work were small and big competitors can bring the websites and their services online. when you allow an isp to prefer their own content over a smaller competitors content, you will reduce the twice. i thought you were talking about the choice of among isps. why chairman wheeler, when he created the rules, talked about the importance of network investment. peter slen: you see a shortage of choice in the market for online content? >> no, right now because we have net neutrality protection. >> there was no evidence of any net neutrality infractions prior. there is no evidence that when -- that they rates
had any impact on the services. you have spotify, amazon, and google play. you have radio stations simulcasting. you have pandora. there is no shortage. that ite is no evidence has had any impact. you would take away free data. those companies, and especially the ones that are not as large, tech startups, new online services, they need and ability to compete. take away these rules, and right now we have protections and there have been concerns raised that they would be looking into had they not been in court in the first year and now by theally repealed commission, but without those protection, most people predict that it will have a harmful
effect on consumers. >> most people do not predict that. to thing that is important can make a political case for net neutrality we are e and open internet. make anpossible to economic case for net neutrality. and that is why the chief economist at the commission at the time said the rulemaking was an economics freezone because the chairman and the two democratic commissioners and the economicff ignored the arguments. and the order itself ignored all of the economic evidence that had been presented. and they were criticized for that by judge williams. >> there are two important voices that disagree with that. one, the department of justice. in the mergers we have seen in the last few years, they have followed the commission and made it clear that isps have an
incentive to pervert their own content over others and they have an advantage by being the access to the internet. and you have to believe the isps themselves. verizon in their lawsuit against the commission on the 2010 rules, made it clear that but for net neutrality protections, they would be entertaining certain business arrangements that would allow them to look at preferred content. peter slen: are they paying different prices for different speeds? >> yes. but when we talk about preferring content over others, it is not just about speed. it can be speed but it can also be the general quality of the service. -- when you have choice for speed for consumers, you have the consumers choosing what level of service they want provided to them.
when you have internet service providers dictating by setting zero rating, or using data capture and arbitrarily or other business methods that may come along in the future, then you have the isps selecting which -- online.an we have never really complained about having speed tiers or data nots, as long as they are arbitrary. peter slen: as the isps move into content providing, does it change the paradigm? questionisenach: the is whether there i the potential or never the potential for discrimination issues. we go back to the microsoft case. microsoft saw netscape as a potential threat.
made it difficult for netscape to compete and the courts were successful. and the justice department when after microsoft for that conduct. if that conduct were to happen in the isp space, those remedies are available. that does not mean you should tier, aa second nondominant company like t-mobile --are they a monopolist? christopher lewis: i would not say that. jeffrey eisenach: if you look around the world at zero rating zero rating programs almost always involve the competitive firms as opposed to the larger incumbent firms. zero rating is, is giving
away a promotional benefit in order to get people to subscribe to your service. uses a tool that companies for competition. and that is where it is useful. to have some economic analysis to come into play. economists have a way of looking at competitive effects. i am not saying that you could never have a situation where anybody with market power -- could be google, netflix, spotify, amazon, verizon or comcast -- all of those firms have market power. use itthem could seek to to disadvantage their rivals. we have a mechanism to please that which still allows innovation, entrepreneurship, and competition rivalry to occur in the marketplace without the government putting the hand of the state on top of that. peter slen: chris, let us get a little more responsive to the chairman.
we want to move to a title i information service. touch regulation drawn directly from the clinton administration. was title i classification expressly upheld by the supreme court in 2005 and it is more consistent with the facts and with the law. second, we are proposing to eliminate the so-called internet conduct standard. this rule gives the commission a roving mandate to micromanage the business practices of internet companies. peter slen: chris lewis. christopher lewis: you would like me to talk about title i and title ii? peter slen: respond to what the chairman said. christopher lewis: he cited the 2005 court decision upholding the determination by the commission that broadband should be a title i service. what is important to note about that is not only did the court
in 2005 uphold the commission's authority to make that decision under a president that is commonly referred to as chef ron deference, differing to the expert agency, i am oversimplifying but we will go with that for now. upheld the same right for the commission with the 2015 rules. the challenge of the 2015 rules in court was to prove that not only did they have chevron 2005,nce as they did in but the wheeler commission had to talk about what had changed in the marketplace. and the marketplace for broadband access in 2005 is very different from what it is today. a made that case and it was upheld in court. that was the justification for moving from title i to title ii. all of that was had doubt by the lawyers. the important thing to note is
thataverage consumers see they have very few choices for internet access. they have local monopolies. and that those local monopolies have the incentive to prefer their own content or to degrade or block content if they chose to it there were business reasons for them to do so and that is why we have the rules. the shift to title ii is just a way to make that protection of -- theyernet values would be upheld in court. commission -- is title ii a nonnegotiable for public knowledge? christopher lewis: we believe that given the current law that congress has given the
commission, it is the strongest framework and that the court validated that in their decision last year in upholding the rules. there is all sorts of talk about should you write net neutrality into law. this needs to be with the understanding that the protections that we got into -- that we got in 2015. jeffrey eisenach: where to begin. let us talk about the general conduct role that the chairman talked about. rule isral conduct another "may i" role. before you create any new differentiateight economically between different services on the internet, you have to ask permission from the commission. practice, what that meant that the commission was
engaged in an unbounded investigation into these free data programs. programs are pursued by companies which are by and large competitive challengers to the dominant companies. innovation and entrepreneurship and competition. those companies are using to more effectively compete. point that you have to keep coming back to is the fact -- and let me give some economic underpinning for why it is a fact. on one hand, we have a thesis that firms have the incentive and the ability to discriminate against content from other people. they also have the incentive not to. and in practical effect, that is
the incentive and ability that has prevailed since the beginning of the internet. the fact of the matter is, what is my incentive? if i start discriminating and make it hard for you to get to you havefor example, choices for mobile devices. carriers,ot only the there are a lot of places you can go to listen to spotify. that market is extremely competitive. if in fact, verizon were to discriminate against spotify and you are a verizon subscriber, you could and you would -- the fact of the matter is that they
are worried about that enough that they have not done it. 10 years ago, the current sir and was at the mobile echo system would be a closed garden. that all of the music, there was a debate about blackberry at one point which did not want to allow outside mapping applications. that whole vision died. the vision that we have now, and it is underpinned by the economics, providing those services it good -- is good business. before we impose a common carrier regulatory scheme on the whole enterprise, there must be some evidence of an actual problem and there is not. jeffrey eisenach: we cannot forget the history of net neutrality. the network was not unregulated. over the course of that history. whether it was the attempt to ,nforce the powell doctrine
there has principles, always been the threat of the fcc acting when net neutrality was violated. because of that, we have gotten to a consensus where the companies have always agreed that maintaining an open internet and the rules are a good thing. you can go through the different ways it has been regulated but there has always been an understanding and the marketplace that this is something that needs to be respected. since we are talking about my own personal use of spotify -- christopher lewis: i am pandora. jeffrey eisenach: we share the competition marketplace. for music services. but when it comes to marketplace to broadband, i do listen spot a fight over my landline service or when i can get wi-fi for free. why?
because mobile services are typically data capped because of the structure of the market because they have more limited bandwidth. and so, right now, there are different choices for mobile broadband. but, there is a reason why most people who can afford it prefer to have a landline and this is -- and fcc is defined by that is why the commission defined it as a basic service. they have -- in order to reach the great multitude -- multitude itinnovations coming online, is still working to be --petitive with my online with landslide love him. it affects the way i listen to spotify. and according to the wheeler
rules, it is supposed to be reflected in the way they respect reasonable network management. peter slen: do you have a problem with the concept of net neutrality? jeffrey eisenach: it is a slippery concept. if the concept is that all of us would like to be able to reach information and use applications and the virtually unlimited plethora of variety and do not want to see that interfered with, then absolutely. i think we are all in favor of net neutrality. if net neutrality means my mobile fighter is not allowed to give me free stuff, then i am not quite so sure i believe in that. that theutrality means heaviest users of the last infrastructure, that being netflix, that government is going to pass a rule that says
netflix and the isps are prohibited from entering into cost-sharing arrangements under which netflix would say -- we want all of our custard -- customers to be able to get for gary and verizon would say, let us find a way to do that also. but we do not have the capital budget to do that. but you help us pay for that and absolutely, and maybe you raise the price. if you believe you are providing greater value, your customer will be happy to pay an extra dollar because they think they are getting a better service. i am not in favor of the government stepping in. , that transaction can never occur. there is another possibility. that verizonty says -- we have all of these customers and they will never see your stuff unless you pony
up. that is kind of what microsoft did. and there is a remedy for that. require -- not peter slen: do you have a problem with that netflix-verizon example? i thinkher lewis: netflix has openly come out as a supporter of the 2015 rules. what it comes to -- when it comes to having these arrangements between content providers and broadband providers, jeff is pointing to the strength of the decision by the wheeler commission and how they created these rules. while some of the folks on our side of the debate were pushing to have clear rules against zero rating and some of these plans, chairman wheeler and the majority did not.
and -- instead, they created a more flexible rule that allowed them to look at these business arrangements and determine if they are problems with the marketplace and a violation of net neutrality. that is a much more cautious approach than the more strident advocates wanted but it has allowed chairman wheeler and others to see if it was a good arrangement or if it was harmful to competition. -- we have pointed out some of the more egregious examples of preferring content. con -- comcast and others. they own a broad range of content that they have chosen to prefer. we are seeing the same things with the mergers coming from at&t. having merged with directv